Response to interpellation 2022/23:175 on over-indebtedness in society
Translated from Swedish by AI; the translation may contain errors. The Swedish text is the original.
Summary AI, written in advance
KD considers over-indebtedness to be a priority issue and that the government takes the risks associated with consumption loans seriously 1. KD argues that measures such as interest and cost caps as well as stricter requirements for marketing have been taken 1. KD emphasizes that legislative changes require investigations and that patience is needed. KD argues that the government provides support to households through electricity price support, reinforced housing allowance and increased guarantee pension. KD argues that the investigation is important and that they take its proposals very seriously. KD argues that the voters have voted for the government's policy 2. V considers that over-indebtedness is not prioritized in the Tidö Agreement or in the budget bill 3. V argues that the government and SD have prioritized tax cuts and the electricity companies' profits 3. V considers that over-indebtedness can be solved through legislative changes, such as changed settlement rules and a ban on SMS loans. V proposes a budget increase to strengthen municipal consumer guidance. V argues that there is already a good basis to act now regarding high-cost credits, marketing and consumer guidance. V argues that the government has not prioritized the finances of ordinary households but instead turned its policy towards large companies and high-income earners.
Written by AI in advance and may contain errors. The numbers lead to the speech a statement builds on; check against the text below.
Statsrådet Erik Slottner (KD)
Mr. Speaker! Nadja Awad has asked me if I and the government intend to take any measures to limit over-indebtedness due to consumer credits as well as to guarantee that all residents have access to consumer guidance where they live.
I would like to start by thanking Nadja Awad for the question. Protecting consumers from falling into a debt trap is a priority for the government. Over-indebtedness causes great suffering for the individual, and the government takes seriously the risks that it can entail as more and more people take out loans that they cannot repay.
In recent years, we have seen a sharp increase in consumption loans. These loans are often associated with higher interest rates than those that apply to many other loans, and many of the borrowers are young. The current situation with high inflation, high electricity prices, and a poorer economic situation implies an increased risk that more and more people are borrowing money to manage their everyday finances. Many borrowers can therefore risk falling into debt traps.
To counter over-indebtedness, a number of measures have been taken in recent years, including interest and cost caps for so-called high-cost credits and stricter requirements for the marketing of credits. Furthermore, credit may no longer be a primary alternative, or be presented first, when purchasing online.
Lenders are obliged to perform a credit assessment before a loan is granted. A credit may only be granted if the consumer has the financial means to repay the debt. To address excessively risky lending, however, additional measures are required. An investigation is currently underway which shall propose measures to counteract risky lending and over-indebtedness. The investigation shall, among other things, examine the credit market and propose how lenders and others who are obliged to perform a credit assessment can obtain a better overall picture of a consumer's debts, as well as consider the introduction of a national debt register. The investigator shall furthermore consider measures for those already in debt. The investigation's report shall be submitted in June 2023.
Regarding Nadja Awad's second question, on consumer guidance, I would like to state the following. Consumers face increasingly complex markets, which increases the need for information and support regarding what rights and obligations one has as a consumer. Consumers can receive help and support from several actors, such as the Consumer Agency's information service Hallå konsument, the four consumer bureaus, and consumer advisors. Many municipalities offer consumer guidance that covers both preventive work and advice and assistance when problems do arise. But as Nadja Awad points out, the proportion of municipalities that choose to offer consumer guidance has indeed decreased over a series of years.
When it comes to support for those in debt, the budget and debt counselors available in the municipalities are important, and that activity is mandatory for municipalities to provide. In many municipalities, consumer advisors and budget and debt counselors collaborate closely, which appears to be a good arrangement that benefits the consumers.
A locally accessible consumer protection that can offer physical visits is particularly important for more vulnerable consumers. The Consumer Agency has been tasked with promoting and developing consumer support by identifying and supporting various social actors - including organizations within civil society - that have the conditions to help consumers in particular need of support in taking advantage of their interests in connection with purchases and in managing private economic problems. For example, the pension organizations have been offering consumer counseling for some time.
I am closely following the developments in the area. Further measures will be considered by the government based on the assignment to the Consumer Agency, which is to be finalized in March this year, i.e., very soon, and on the grounds of the Riksdag's announcements that the government should review how municipal consumer guidance can be developed.
Nadja Awad (V)
Mr. Speaker! I thank the Minister for the answer. Minister Erik Slottner says that it is a priority for the government to protect consumers from falling into the debt trap. But this is not seen either in the Tidö Agreement's priority issues or in the government's budget bill. In the Tidö Agreement, not a single word is mentioned about over-indebtedness or that the government would have a plan to prioritize this issue during the four-year mandate period. In the budget bill, no new funds or resources are allocated.
Instead, the government and the Sweden Democrats chose to prioritize a tax cut for high-income earners who earn over 45,000 kronor per month. The government and the Sweden Democrats also prioritized that the electricity companies should make large profits of 100 billion kronor per year due to the extreme electricity prices. They prioritized away the elderly who have such a low pension that they live in poverty. They forgot about the children who are evicted from their homes and live in insecurity. They prioritized away the young who get a much tougher start in adult life with debts and who see no end to this.
Nowhere do they prioritize ordinary households and ordinary people. Nowhere do they prioritize solving the over-indebtedness and the causes behind it all.
Mr. Speaker! Many times poverty is linked to increased debts. It is very rare that one meets someone who is struggling financially and who does not have debts.
We know that the increasing inflation with rising interest rates, higher electricity prices and more expensive food means that more and more people find it harder to make ends meet. It hits hardest those who have the smallest margins.
A group that the money is not enough for are the over 160,000 Swedes who live on subsistence minimum due to debts. This alarms the Consumer Agency. Over 400,000 Swedes have debts with the Enforcement Authority.
Mr. Speaker! In addition to the indebted being affected purely economically, the risk of homelessness, illness, and suicide also increases. A study from Södertörn University showed that the risk of suicide is more than twice as high among the indebted. Furthermore, the figures from the Enforcement Authority reported that the number of children evicted from their homes continues to increase.
I mentioned the young people earlier. They are an overrepresented group among those in debt. Even though the number of young people with debts at the Enforcement Authority has decreased over the last ten years, the debt amount for the age group 18-25 has increased by 430 million. It is among the young women that the increase is greatest.
Household debt and over-indebtedness in Sweden is an alarming situation. Sweden even stands out significantly in comparison to other EU countries. Yet, instead, the Minister for Civil Affairs is waiting for an investigation to be completed, even though he here in the chamber of the Riksdag provides the answers to all the problems.
It is about increased regulation of high-cost credits such as SMS loans and other quick loans. It is about ensuring that consumer guidance exists in all municipalities and not only the national consumer guidance. It is about ensuring that all lenders are obliged to perform a credit assessment before a loan is granted. It is also about stricter requirements on the marketing of credits.
Mr. Speaker! The Enforcement Authority, the Consumer Agency, Sveriges Konsumenter, the Advertising Ombudsman, and the Consumer Ombudsman have established much of this, and there is good supporting documentation. So what is the Minister waiting for? An investigation. Does the government not see the importance of prioritizing solving the over-indebtedness in society here and now?
Statsrådet Erik Slottner (KD)
Mr. Speaker! It is noticeable that the Left Party has never sat in government. I believe that Nadja Awad still knows that in order to be able to make legislative changes, one needs to investigate it beforehand. That is how Swedish legislative work and Swedish democracy function.
It can be a bit sluggish sometimes. I can myself be a bit impatient that the machinery moves forward slowly and one has to wait for investigations. But if one is to take the measures that Nadja Awad proposes, they really do need to be investigated. It is nothing that we can just snap our fingers and the next day the legislation is in place. Much of what Awad proposes here is precisely what is being considered in the investigation that is to be presented now before the summer. I really look forward to it.
It is completely true that the Tidö Agreement does not mention over-indebtedness and consumer issues at all. It is not one of the six main areas that are in the Tidö Agreement. It is completely different areas. This lies outside the Tidö Agreement, as a great deal of other government policy does. But that does not mean that it is not an important issue for the government.
When I, at the beginning of the term, have had to carve out my most important and prioritized issues as Civil Minister with responsibility for precisely consumer issues, over-indebtedness has been one of the three prioritized issues for me. I was very quick to say that. I think it is a very important issue.
I would still like to appeal for patience. There is an investigation that is nearly finished. It is to consider a great deal of what Nadja Awad herself raises and such questions as the Christian Democrats have also had in their various programs on consumer issues.
I think we should have the patience to wait a few more months and consider the proposals, and send them out for consultation. I hope that we can come to the Riksdag with really good and sharp proposals that will contribute to minimizing the risk of irresponsible lending and thereby minimize the risks of over-indebtedness.
Awad's contribution became somewhat of a general economic debate, as it can occasionally become when Vänsterpartiet debates. I personally have nothing against this. But it is not what I am going to participate in now. We are going to speak about what the interpellation is about.
The government is providing support to households due to the tough situation we find ourselves in. The electricity price support amounts to approximately 60 billion kronor. It is to go to households to compensate for the very extraordinarily high electricity costs that they have now had for a fairly long time.
We can note that the increased housing allowance for families with children is being extended. Otherwise, it would have been phased out this year. This means a maximum of 1,300 kronor per month to many economically vulnerable families with children. It is a very important support.
I can also mention that the guaranteed pension is increased by 850 kronor per month. It is an important supplement for those living on the lowest pensions so that they can cope with the rising inflation.
The government is implementing several measures for households that are now struggling and finding things tough, yet still must manage and avoid taking out various credits to make ends meet.
In addition to the investigation we have spoken about, which is to come with proposals to counter over-indebtedness, the Consumer Agency also has a mandate that is to be reported within just a few weeks, which I also look forward to receiving and analyzing.
Nadja Awad (V)
Mr. Speaker! I note: That which one has not budgeted for, one does not prioritize. That which one has not written a policy about, one does not care about. I would not place so much hope in the investigation that is to come, considering that the government with the Sverigedemokraterna has shown that they are not afraid to scrap investigations. They have scrapped the investigation on corruption and shut down the investigation on karens.
I want to clarify here that over-indebtedness can be resolved through legislative changes. In the Left Party's motion on Consumer Issues, we mention, for example, that the settlement rules for debtors who have ended up with the Enforcement Authority should be changed so that the principal debt is paid before cost and interest debts. We also highlight that a final prescription period for debts should be introduced and that SMS loans and other quick loans should be prohibited.
But some legislative changes do require a budget, which this government has not provided for. We in Vänsterpartiet have taken the political responsibility by providing for the resolution of the increasing over-indebtedness in our motion and budget proposal. It is irresponsible to do anything else.
Vänsterpartiet proposes an increase of the grant by 100 million kronor compared to the government's proposal in order to strengthen consumer guidance in the municipalities. When using the support for employment, 50 percent shall be co-financed by the municipalities.
It is also more important than ever to support organizations that provide support and information on consumption. Organizations that work with consumer issues should receive a large part of their funding through state support. It is therefore why we propose an increase of the appropriation by 10 million kronor compared to the government's proposal for 2023.
It is becoming increasingly difficult and more complicated to be a consumer. There are more technically advanced products, more complicated financial services, and a global market that presents the consumer with greater challenges.
This is happening at the same time as the municipalities have, over several years, gradually cut back on the funds for their consumer advisors. The Consumer Agency notes that 111 of the country's municipalities do not have any consumer guidance at all.
It means concretely that 2 million consumers have a very difficult time obtaining support and help. The remaining municipalities offer some form of consumer guidance, but unfortunately, it is many times entirely too deficient with limited opening hours and too few staff. The fact that more and more people live in an economically pressured situation increases the need to protect consumers from making choices that worsen their situation.
Mr. Speaker! It is not enough to simply acknowledge, as the Minister does here, and regret that the proportion of municipalities offering consumer guidance has decreased over a series of years. Words cannot solve a negative social development. Actions do.
My question is: Why has the government not prepared a budget for this work during this mandate period, if it is now waiting for the investigation that is to come in a few months?
Statsrådet Erik Slottner (KD)
Mr. Speaker! It is very difficult to prepare for any proposals that will be presented in an investigation that one is not aware of. It would be very strange. It is of course the case that the investigator will come forward with their proposals, which shall be prepared and sent out for consultation, and then the government shall take a position. If proposals are then presented that involve cost increases, they must naturally be included in the budget that is presented that autumn.
Nadja Awad is trying to make a joke and argues that because we have scrapped some inquiries, it means that the government does not take inquiries seriously. That is absolutely not the case. We have chosen to remove certain inquiries - sometimes because we have prioritized differently, sometimes because we have thought the inquiries have been purely bad. It is not strange, as it was another government with a different political direction that commissioned them. But the inquiry that is to come with proposals to counter over-indebtedness, we do not think has been unimportant. We think it is important, and therefore we have also let it continue. Of course, we will take that inquiry's proposals and conclusions very seriously.
A question that Awad raises is SMS loans. I will not anticipate the government's position, but I think it is a very interesting question to look at. When are SMS loans granted, and in what way does this occur? The more accessible a credit is, the more the risks for irresponsible lending naturally increase. This we will, of course, look into. Then we will return with what changes, if any, we intend to make.
Regarding the municipal consumer advisors, it is not a mandatory activity. Just as Awad quite rightly says, the number of municipalities offering consumer guidance has decreased in recent years. Parallel to this, the Consumer Agency's information service Hallå konsument has increased very much in use and development. Many municipalities refer to that very service. We shall have to see if Hallå konsument perhaps can to some extent replace some of the preventive work the municipalities have had.
However, the budget and debt counseling is mandatory for the municipalities. It is very possible that one could build in a certain guiding function. Some of the municipalities that have scrapped the guides have also included the preventive and guiding work in the budget and debt counseling itself.
I also do not think we should fall into the trap of becoming completely stuck in the old methods that we have always used. The preventive work to counteract over-indebtedness is very important so that over-indebtedness does not arise at all. However, I am not entirely sure that the consumer advisors are the given answer to this. There may be other solutions and other ways, not least with the ever-increasing digitalization we see today, to strengthen the preventive work.
It is not entirely certain that the municipalities are the most suitable. It might be the regions; it might be the county administrative boards or the Consumer Agency. Not least, it could be civil society, for we must not forget that civil society also has an important responsibility and mandate in this. They also receive 12 million kronor from the Consumer Agency to have an advisory function.
There are, therefore, different actors who in different ways work to strengthen the preventive work so that fewer people take out excessively large loans, especially loans that they cannot manage. The Consumer Agency is a part of this, but there are also very many others who are worth mentioning.
Nadja Awad (V)
Mr. Speaker! I would like to bring this up with the investigation. If the previous government appointed this investigation, it must nevertheless mean that the issue is a very prioritized issue for our future. There are also a number of solutions discussed since earlier, as I mentioned, from Kronofogden, Konsumentverket, Sveriges Konsumenter, Reklamombudsmannen and Konsumentombudsmannen.
If one has a policy regarding these issues, one also prepares a budget for them. It becomes a bit strange when Erik Slottner says that there are certain proposals that are interesting to look at, such as this one with quick loans and consumer guidance, but that one is still waiting for an investigation in order to establish the correct political incentives for them.
Here I want to clarify that there is already a good basis. Vänsterpartiet thinks that we should look more at the questions I have mentioned – the high-cost credits, the marketing, and the consumer guidance. Of course, we can wait for what the investigation has to say about other questions, but when one still has these important points in the background to base a policy on, in order to be able to create better conditions for the young indebted in the future, I think that one should reasonably act here and now.
I can only wonder if this has to do with the fact that this government has previously turned its policy against large corporations and high-income earners and never prioritized the finances of ordinary households. Then perhaps it is a bit difficult to get into a new area that affects the poorer in our society and not the richer.
Statsrådet Erik Slottner (KD)
Mr. Speaker! Then we got a bit of classic left-wing rhetoric there at the end. It is always wonderful, I think, because that is when the debate always starts.
We are not just sitting passively and waiting for an investigation to come. Another work is ongoing. We have an entire consumer unit at the Ministry of Finance, and we have the Consumer Agency, which works with these issues daily. They know that I think this is an important issue, because I have truly told them that.
So, there is a lot of other work ongoing. I cannot stand here and now and tell exactly what it is, but that must be kept a bit within my department for the time being. Then we will return when there is something to present.
I am glad that the investigation has been appointed. I actually place a great deal of hope in it and hope that it will produce a number of proposals that we can then return to the Riksdag in a government bill.
I do not think the voters agree that the government and the governing parties do not understand the finances of ordinary households and only care about high-income earners and large corporations. A majority of the voters have voted in this government and this cooperation. They have given us a majority in the Riksdag and clearly want the policy that we are now pursuing.
The Left Party has a history of saying no to every tax cut aimed at precisely low- and middle-income earners, the working population, for example in the form of five job tax credits which have meant incredibly much for ordinary households with working incomes. The Left Party has said no to this. The working household would have been significantly poorer and less prepared for the recession we are now entering if the Left Party had been allowed to participate in governing compared to the bourgeois parties.
Source: The Swedish Parliament. The speeches come from the open data of the Riksdag, translated into English by AI, which may contain errors.